The weakness came as part of a knee-jerk market reaction to news that United States regulators were suing Binance and its CEO, Changpeng Zhao, also known as CZ, over “a variety of securities law violations.”
“Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” SEC Chair Gary Gensler stated in part of a press release.
While sparks continued to fly between the exchange and the U.S. Securities and Exchange Commission (SEC) — even on social media — Bitcoin traders looked to what a recovery might look like.
Popular trader Crypto Ed considered $26,200 as a bounce target before fresh downside kicked in thanks to a lack of spot buyer demand.
“I think we’re pretty close to a bounce, but could be a short-term bounce,” he summarized in a dedicated YouTube market update following the Binance news.
Crypto Ed added that his downside target lay at or just above the $24,000 mark.
Fellow trader Crypto Tony agreed, sharing a similar mid-term roadmap for BTC price.
“Shed some more profit on my short this morning, but now looking for a relief wave before the final leg down towards $24,500,” he told Twitter followers.
“I anticipate this is the final leg down before we accumulate for pump to come July / August.”
On the day, trading suite Decentrader warned over a high long/short ratio on Bitcoin, this even beating levels seen after the implosion of exchange FTX in November 2022.
“We would typically like to see this start to decrease, if we are to keep bouncing,” it argued in part of Twitter commentary.
Risk assets already “on edge”
Others looked beyond the Binance story to call for the broader risk asset environment to improve in the coming months.
“Feels like it’s a matter of time until Bitcoin finally breaks that 30k level once and for all,” trader Jelle wrote in part of his latest analysis.
Jelle, like others, noted that the 200-week moving average (MA) — a key support line — remained intact.
Also intact were various support structures on trader and analyst Rekt Capital’s radar covering daily timeframes.
“So far, so good,” he summarized about the potential for an exit higher, potentially invalidating a bearish “head and shoulders” structure from the weeks prior.
An additional tweet mentioned a “successful retest” of support in the offing.
“BTC broke down from a head and shoulders pattern in May. But there’s classic whipsaw action around the neckline,” trading account Game of Trades nonetheless acknowledged.
“The pattern remains valid unless the price moves above the right shoulder.”
An accompanying chart gave a potential downside target of just $24,000 for BTC/USD as a result of the head and shoulders event.
Others looked for less movement, such as trader Crypto Tony, who eyed $25,300 as a possible destination, subject to $28,350 staying unflipped as resistance.
Macro lull comes as traders eye dollar rebound
In an unusual week of calm for traders, June 5 through June 9 will see little by way of macroeconomic data come out of the United States.
With the debt ceiling debacle left behind, the next potential volatility catalysts will come in the form of macro reports for May, such as the Consumer Price Index (CPI) print — these nonetheless not due for another week.
With that, attention is focusing on oil production cuts from Opec+ members, as prices continue to fall despite existing reductions in output.
A more direct potential headwind for Bitcoin and crypto, meanwhile, comes in the form of the U.S. dollar.
The strength of the greenback has been forming a rebound since the start of May, and since then, the U.S. dollar index (DXY) — traditionally inversely correlated with risk assets — has gained around 3.5%.
Popular analyst Matthew Hyland noted increasing relative strength index (RSI) scores for DXY on weekly timeframes.
Fellow trader Skew flagged 104.7%, the current June high, as a key level to close above to form a bullish DXY trend.
“Strong close & moving higher in early EU trading session,” he commented on the day.
“If USD closes above $104.7, I would consider that as USD strength. So far this looks risk off but we see later on.”
Over the weekend, meanwhile, TraderSZ described DXY as “bullish until proven otherwise.”
Stocks buoy bullish crypto case
The debt ceiling resolution had an immediate cathartic effect on equities, but crypto markets have broadly failed to copy their enthusiasm.
This may still change, market participants argue, as the S&P 500 hits ten-month highs.
“The US House has passed a key debt ceiling deal, launching the #SP500 to its highest price since August. Altcoins like $LTC, $LEO, and $FGC have jumped today,” research firm Santiment wrote on June 2.
“With crypto lagging behind equities, there could be some $BTC catch-up time coming soon.”
An accompanying chart also tracked a “rebound” for gold, this nonetheless short lived with a retracement setting in to mark the new week.
At the time, as Cointelegraph reported, others were also eyeing positive correlation between Bitcoin and a resurgent S&P 500.
Bitcoin hodlers comfortably in profit
“It’s easy to ‘feel’ that the Bitcoin rally is over, but the facts say it’s not,” popular technical analyst CryptoCon wrote in findings last month.
At the time, BTC/USD was almost $1,000 higher than current levels, but enthusiasm was just as lacking.
CryptoCon was analyzing the state of Bitcoin holder profitability, using the Net Unrealized Profit/Loss (NUPL) metric created in 2019 by entrepreneur and analyst Tuur Demeester and others.
For the past several months, NUPL has stayed practically stationary around a value of 0.25 — indicating that overall, the BTC supply are modestly “in the black.”
NUPL measures the difference between unrealized profit and unrealized loss, both of these calculated by gathering unspent transaction outputs (UTXOs) to see how much coins are worth compared to when they last moved on-chain.
“Any value above zero indicates that the network is in a state of net profit, while values below zero indicate a state of net loss. In general, the further NUPL deviates from zero, the closer the market trends towards tops and bottoms,” analytics firm Glassnode explains in an introduction.
While calm in recent months, NUPL has delivered an uptrend retest, which is cause for confidence, CryptoCon now says.
“31k was not the end, hope you’re ready!” he concluded in an update this weekend.
An accompanying chart of NUPL showed its behavior versus investor sentiment at various stages over the past ten years.
Largest Bitcoin whales at center of “dichotomy”
On the topic of investor sentiment, the current view of the market varies heavily between classes of hodler.
As noted by Glassnode itself, most remain distinctly risk-off on Bitcoin — since May, selling has dominated despite the lack of capitulatory events.
The one exception, it appears, is the largest class of Bitcoin “whales.”
Uploading a chart of accumulation versus distribution adjusted by cohort, Glassnode showed that wallets holding at least 10,000 BTC are adding to their positions, while everyone else is reducing exposure.
“An interesting dichotomy across the Bitcoin Accumulation Trend Score persists, as the largest of Whales (>10K BTC) continue to aggressively accumulate, whilst all other major cohorts experience heavy distribution,” researchers commented.
The last accumulation phase from these “mega whales” was in late 2022, with BTC/USD beginning its 2023 rebound weeks later.
The whales then paused in mid-January, entering a distribution phase of their own before flipping back to accumulation in May.
Bitcoin (BTC) “consolidation” could end by July, new research predicts as optimism over a BTC price breakout returns.
In its latest market update on June 2, trading firm QCP Capital revealed a bullish bias on both Bitcoin and largest altcoin Ether (ETH).
QCP Capital: Bitcoin consolidation “played out perfectly”
Bitcoin price has been ranging between $26,000 and $31,000 since mid-March, but analysts are increasingly calling time on the sideways action.
QCP Capital is among them, predicting a change of course as soon as the end of the month.
This, it argues, is thanks to the United States debt ceiling “sideshow” vanishing, leaving Bitcoin closely mimicking its consolidation and breakout phase from 2020.
“With the passage of the Debt ceiling bill through the House and Senate that extends the ceiling until Jan 2025, we can now all move on and not have to worry about any political sideshow again until next year’s US Presidential elections,” it wrote.
“This means we now return to our regular programming of proper macro and crypto narratives.”
For QCP, the price levels may be different, but underlying behavior is the same in 2023 as at the start of the Coronavirus pandemic.
Then, the Federal Reserve unleashed a giant $4 trillion of liquidity, buoying risk assets and ultimately sending Bitcoin to new all-time highs.
“In March 2020 we were on the verge of a massive price breakdown below 5k when the Fed unleashed the liquidity tap, resulting in an exponential price increase as we approached the halving cycle the following year,” it wrote, quoting a previous edition of its “Just Crypto” newsletter series.
“Similarly in March 2023, we were about to break below 20k on BTC as a result of the banking crisis risk-off, when the Fed again unleashed the liquidity tap to drive us back above 30k, as we head into the next halving cycle next year.”
Should the relationship continue to play out, the next phase is obvious — a dramatic exit of the trading range, with QCP positioning long options plays.
“This consolidation has played out perfectly so far, but we expect that we are soon coming close to the end sometime this month. As a result, we recommend positioning for an upcoming big move through long 3m and 6m strangles here, with a bias to the long call side,” it added.
An accompanying chart showed the month of June as a hotspot for both BTC and ETH volatility from 2019 onward.
Betting on a BTC price breakout
As Cointelegraph reported, other signals coming from within Bitcoin point to a new paradigm taking over shortly.
The pair showed little signs of trend change as a stalemate between bulls and bears continued to produce little volatility.
The collection of moving averages (MAs), as well as the short-term holder (STH) realized price, near $26,000 thus stayed untested on intraday timeframes.
Analyzing the current setup, popular trader Crypto Ed considered the potential for upside topping out at $27,500.
“I do think we go down, but as long as we do not break that $26,000, there is a chance for a bullish surprise,” he said in a YouTube update on the day.
To break the current impasse, Crypto Ed continued, Bitcoin would nonetheless need to tackle the area above $27,600.
“Now I think we bounce back toward $27,500 — resistance of the previous range high — and from there I will be looking for, possibly, shorts toward $25,000,” he confirmed.
Fellow trader Crypto Tony likewise urged caution until $27,500 returned. His focus was on largest altcoin Ether (ETH), which rebounded from lows of $1,840 at the May monthly close to hit $1,897 on the day.
“Now i have gone over the structure and we really are not bullish unless we flip $2,000 into support,” part of Twitter commentary nonetheless warned.
An accompanying chart presented a target of $1,700 or lower should the $2,000 mark fail to flip.
Bitcoin move “should be here”
Elsewhere, others argued that time was ticking for Bitcoin price to break out, with financial commentator Tedtalksmacro flagging favorable macro conditions.
The largest cryptocurrency is so far 5.5% lower in Q2, meanwhile, a stark contrast to Q1 gains of over 70%.
Analyzing multiple timeframes, trading suite Decentrader saw little reason to expect an abrupt trend change yet.
Warning of “moderately bearish” or “declining” signals on its proprietary trading instruments, it flagged downside support levels tied to key moving averages (MAs).
These are $26,250, $26,000 and $23,035 for the 200-week, 20-week and 200-day MAs, respectively.
“Liquidity wise, Bitcoin is still straddling. Downside is currently protected by the 200WMA. Upside, all meaningful liquidity is above $30k,” it added in part of a Twitter thread, reiterating findings from co-founder, Philip Swift, the day prior.
Bitcoin (BTC) is in a “transition,” which should pave the way to the next bull market top, new research has concluded.
In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode unveiled its latest tool for tracking Bitcoin’s resurgence.
Bitcoin hodlers in “transition”
After the 2022 bear market and signs of recovery in Q1 this year, on-chain metrics have undergone a broad transformation, many suggesting that a long-term BTC price bottom is already in.
With price action stagnating since mid-March, however, doubts have returned — along with downside targets which stretch toward $20,000.
For Glassnode analysts, however, Bitcoin’s long-term investor base is already preparing for better times ahead.
Using existing on-chain tools, analysts unveiled a new way of tracking sentiment among these long-term holders (LTHs) — those hodling BTC for at least 155 days.
The tool, “Long Term Holder Spending & Profitability,” splits LTH behavior patterns into four phases.
After a period of “capitulation” at the end of 2022, LTHs have begun a “transition” toward a state of “equilibrium” before full “euphoria” — the next BTC price cycle top — hits.
Capitulation is defined as a situation in which “Spot price is lower than the LTH cost basis,” Glassnode explains, with significant LTH spending thus “likely due to financial pressure and capitulation.”
Transition, meanwhile, is when the “Market is trading slightly above the long-term holders cost basis, and occasional light spending is part of day-to-day trade.”
The LTH cost basis, as of May 30, lies at around $20,800, separate data shows.
“Our current market has recently reached the Transition phase, flagging a local uptick in LTH spending this week,” “The Week On-Chain” commented.
“Depending on what direction volatility erupts next, we can employ this tool to locate local periods of overheated conditions, as observed from the lens of Long-Term Holders.”
“Seeking equilibrium” — but for how long?
Complementing LTHs, Bitcoin’s short-term holder (STH) cohort, which corresponds to more speculative investors, is already on the radar.
“The digital asset market continues to outperform major commodities in 2023, however all are currently experiencing a meaningful correction. Having recovered from the depths of the 2022 bear market, Bitcoin investors find themselves in a form of equilibrium, with little gravity in either direction,” the newsletter summarized.
“Given the extremely low volatility, and narrow trading ranges of late, it seems this equilibrium is soon to be disturbed.”
As early-week excitement faded, traders and analysts warned that now was a make or break point for the short-term trend.
“Crucial area approaching here for Bitcoin and dipped into it,” Michaël van de Poppe, founder and CEO of trading firm Eight, summarized.
“If this zone sustains as support & Bitcoin will be able to reclaim $27,500, everything looks like we’ll continue the upwards trend. Drop beneath $26,600 and we’ll see new lows.”
Trader Skew added that spot buy liquidity on largest global exchange Binance had been taken, with a reversal now required to avoid a retest of the 200-week moving average (MA).
This had functioned as earlier support, lying at just above $26,000.
Skew further noted that BTC/USD was testing several exponential MAs on the day in a “pretty important” performance.
Continuing on the Binance order book, monitoring resource Material Indicators had some predictions for how the monthly close could play out.
“For the most part, Bitcoin liquidity changes in the order book have been pretty subtle today, but by zooming out a little wider we can see ask liquid from the $31k – $32k range is dropping in closer to the active trading zone while bid liquidity has been laddered down, then adjusted slightly,” it told Twitter followers.
“Liquidity consolidating into the range should dampen volatility heading into the monthly close. The bigger concern for bulls is that bid liquidity is thinning out.”
Liquidity ready to fuel Bitcoin fire
Offering some hope in the event of upside returning, meanwhile, popular analyst Philip Swift noted liquidity lying in wait above $30,000.
Bitcoin (BTC) starts a new week in an altogether different mood as the weekly candle close brings a move higher.
The largest cryptocurrency, still stuck in a narrow range, is at last showing signs of life after several spikes to two-month lows.
With volatility back in play, traders nonetheless remain conflicted — can short-timeframe strength lead to an overall trend breakout?
Opinions differ as May comes to an end, and brings with it a macroeconomic showdown, which is already making itself felt — the United States debt ceiling deal.
With an agreement to raise the ceiling and avoid a U.S. government default almost here, risk assets may see relief across the board. Since stock markets are closed until May 30, however, it will be a game of “wait and see” for Bitcoin traders to start the week.
BItcoin itself, of course, is always open, and the debt ceiling appears to have formed an impetus for optimism despite representing little in terms of macroeconomic policy trends.
With that, the conversation within crypto is all about what happens next.
Cointelegraph takes a look at these and some other important factors to consider when it comes to BTC price action in the coming days.
Debt ceiling deal nears Congress
After several weeks of drama, the Biden administration has formed and presented a solution to the U.S. debt ceiling debacle and presented it to Congress.
While it remains unknown whether it will pass, bets are already frontrunning the outcome.
“I think it is virtually certain that it will be passed,” Jeremy Siegel, professor of finance at the University of Pennsylvania, told CNBC, summarizing a popular theory.
A true doom scenario, others have pointed out, is unlikely, as the deal stalling at this point does not immediately open the U.S. to a default scenario.
“The coming week will still bring uncertainty around the debt ceiling as the agreement makes its way through Congress,” trading firm Mosaic Asset continued in the latest edition of its newsletter series, “The Market Mosaic.”
“We’ll also get an updated report from the ISM on manufacturing sector activity, plus the May jobs report. Regardless of those headlines, I’m watching the action in the average stock and cyclical sectors most closely.”
News of the deal itself, meanwhile, worked instant magic on a lackluster BTC/USD, which saw some classic end-of-week volatility to briefly hit $28,450 overnight.
Currently trading at just below $28,000, the pair has managed to improve its outlook, even as it concerns the intraweek trend.
“Now that’s a really good BTC Weekly Close,” popular trader and analyst Rekt Capital responded.
“$BTC lost ~$27600 as support two weeks ago and now has positioned itself for a retest/reclaim of this same level.”
Rekt Capital had previously warned about a looming broader breakdown which could take BTC price action back toward $20,000.
“Dip into black would be healthy and successful retest there could position BTC for a revisit of ~$28800,” he now said, flagging the zone to hold in the event of a subsequent dip to support.
Analysis further raised the possibility of Bitcoin invalidating a recently-formed head and shoulders pattern on daily timeframes, this typically linked to the start of a long-term bearish phase.
“BTC is in a very early Bull Market,” Rekt Capital added.
CME gap guides BTC price dip bets
With that, Bitcoin is providing fuel for debate as bulls inch closer to testing the top of what has been a stubborn multi-month trading range.
Those betting on downside continuing this week have already been caught short — literally. Short traders saw $44 million of positions liquidated on May 28 alone, which according to monitoring resource CoinGlass represents a one-month high.
For well-known market participants, however, there is still cause to stay conservative on what comes next.
Trader Skew noted that Bitcoin’s weekend upside had opened up a gap in CME futures, with the implication that BTC/USD should dip lower to “fill” it at the open.
“Could see a sell off post debt ceiling deal & then gold / btc go on a run before the final rug,” part of Twitter commentary stated on May 29.
Fellow trader Mark Cullen noted that bid liquidity from nearer $25,000 had shifted higher, with traders anxious to get buy orders filled.
“Every time I do this I tend to kick myself as the would have been filled in the end,” he acknowledged, suggesting that a return toward that level remained on the table.
Trader Daan Crypto Trades meanwhile said that the battle for upside continuation was still ongoing, with a “key” resistance level still to be won.
A new milestone for Bitcoin difficulty
For Bitcoin network fundamentals, the trend is as decisively bullish as at any time this year — and new all-time highs are near.
Mining difficulty is due to add 2.5% on May 31, taking it over 50 trillion for the first time ever according to data resource BTC.com.
Add hash rate into the equation, itself circling the highest levels ever recorded, and the picture becomes clear regarding miner conviction and competition.
As noted by analytics firm Glassnode last week, meanwhile, miners have returned to hodling — increasing their overall BTC balances by retaining more BTC earnings than they sell.
“Following a large outflow of Bitcoin across the FTX implosion, Miners (excluding Patoshi and early unlabelled Miners) have expanded their balance sheet by +8.2K BTC, increasing their holdings to a total of 78.5K BTC,” it noted alongside a chart.
William Clemente, head of crypto research firm Reflexivity Research, meanwhile contrasted the current trend in hash rate versus spot price with Bitcoin’s 2019 price recovery.
As Cointelegraph often reports, a popular mantra still held by some longtime market participants focuses on spot price following hash rate on longer timeframes.
Hodl trend in “up only” mode
Onoing monitoring of Bitcoin hodlers produces few surprises — long-term investors refuse to sell, ferreting away more of the supply on a daily basis.
Less and less BTC is thus available for purchases as dedicated buyers send Glassnode’s “Hodled and Lost Coins” metric to multi-year highs.
At 7,725,079 BTC, these “Hodled and Lost Coins” now account for more BTC than at any time since May 2018.
This month, Cointelegraph reported on short-term price trends depending increasingly on the actions of short-term holders, typically correlated with speculative trading activity.
These investors, who have held BTC for 155 days or less, currently have a cost basis of $26,500, making that level a key, and so far successful, support zone.
Additional findings meanwhile reveal that there are also now more Bitcoin wallets with a non-zero address than ever before — over 47 million.
MACD crossover may spark 50% gains
The return of a 2023 bull signal is giving some pause for thought this week.
The week’s macroeconomic data from the United States had ended with a surprise, as a new Personal Consumption Expenditures (PCE) index print showed the economy weathering tighter financial conditions much better than expected.
Markets then began to price in a June interest rate hike from the Federal Reserve — something which should form a headwind for risk assets but which failed to dampen a BTC price rebound.
Despite the price comeback, however, the mood remained cautious — for some, overly cautious.
“Retail is so extremely bearish on Bitcoin and Crypto, it’s almost insane,” Michaël van de Poppe, founder and CEO of trading firm Eight, argued.
“People are stuck in the 2022 mindset.”
Popular trader Skew noted Bitcoin’s strong reaction at the 200-week moving average (MA) near $26,000, with more key trend line challenges now in the making.
“Price trying to reclaim 100D MA after nice move up from 200W MA. Price is currently pinned between 4H EMAs & 1D EMAs,” analysis of the 4-hour BTC/USD chart stated the day prior.
“Expecting a pretty major move soon, inflection point is here imo.”
Additional insights concluded that “froth” had cleared from exchanges, along with over $300 million of open interest on largest-volume exchange Binance.
Skew is not the only well-known voice calling for a pronounced shift in BTC price behavior next. This week, Checkmate, lead on-chain analyst at Glassnode, predicted “big moves coming.”
A subsequent overview of some key on-chain metrics presented BTC/USD at a “decision point.”
Bitcoin price still “consolidating”
Fellow trader and analyst Rekt Capital meanwhile noted that additional strength was still needed to flip the trajectory in bulls’ favor.
“BTC still in the middle of the red downtrending channel, just consolidating here with the red resistance area above the crucial one to beat if sentiment is to decisively shift in the short-term,” he wrote about a chart of 1-day timeframes.
That chart also showed the bearish head and shoulders pattern, something Rekt Capital previously warned could result in a longer-term bearish phase — including a trip toward $20,000.
The latest action was a world away from just the day prior, when upside formed the main story for the market and Bitcoin was aiming for $27,500.
Rangebound volatility was thus the name of the game on the day, while traders eyed key levels for bulls to protect going forward.
These came in the form of the 100-day and 200-week moving averages (MAs), both already a topic of conversation in recent weeks.
“We are getting a long awaited retest of the 200-Week Moving Average. IMO, this is the MOST important level for BTC bulls to hold,” monitoring resource Material Indicators summarized to Twitter followers.
Michaël van de Poppe, founder and CEO of trading firm Eight, further noted the 200-week MA and exponential MA coming into play for the total cryptocurrency market cap.
This he described as a “moment of truth” for the chart.
Popular trader Daan Crypto Trades meanwhile eyed long positions returning to the market at the lows, just hours after the downside began. Longs “buying the dip” had been a characteristic feature of recent local lows.
“Bybit Open Interest already almost back to where it was before this long squeeze. Seems like quite a lot of longs instantly re-entering,” he commented.
Debt ceiling woes mount
United States equities also lost at the open, amid concerns over markets’ reaction to the Biden administration’s debt ceiling stalemate.
For trading platform QCP Capital, now was the time for caution for Bitcoin bulls.
BTC/USD “holding up” — acting in a tight range — despite the uncertainty increased the chances of a catch-up correction, it warned in a market update on the day. The ultimate result, however, would depend on the resolution of the debt ceiling problem.
“Although our medium-term bias is for higher BTC, on a deal scenario – we think BTC could quickly sync back with what other macro markets are implying,” it summarized.
“On a ‘no-deal’ scenario however, we will easily take out the year’s highs.”
The pair had seen brief volatility after Jerome Powell, Chair of the Federal Reserve, gave new commentary on policy and the outlook for inflation.
While leaving the door open for change should it be required, Powell’s language did not offer risk assets clear signals. Responding, financial commentary resource, The Kobeissi Letter, warned that “tons of uncertainty” lay ahead.
Bitcoin nonetheless soon forgot the event, returning to a range already familiar from the weekend prior.
Assessing the climate on exchanges, popular trader Skew argued that a fresh volatility was only a matter of time.
“Growing variance between perp & spot market; which ive posted about previously,” he summarized in part of Twitter coverage on the day.
“Very tight illiquid range here between post friday FED speakers. Expecting market to find an EQ early next week in which both spot & perp market will be forced to establish a trend.”
A further post noted that the early signals were there for the status quo to be disrupted.
Fellow trader Crypto Tony meanwhile forecast that the range would stay in place until the start of the new macro trading week.
A close above or below the levels marked on an accompanying 4-hour chart, he added, would form cause to reconsider the market.
Caution over “big sell off” for Bitcoin
Others were bearish on the immediate future when it came to BTC price performance.
All eyes were on Fed Chair Jerome Powell on the day, who was speaking at the Thomas Laubach Research Conference in Washington, D.C.
Market nerves had returned the day prior as other Fed officials, along with jobless data, had heightened expectations of interest rate hikes continuing.
“While the financial stability tools helped to calm conditions in the banking sector, developments there, on the other hand, are contributing to tighter credit conditions and are likely to weigh on economic growth, hiring and inflation,” he said.
“So as a result, our policy rate may not need to rise as much as it would have otherwise to achieve our goals. Of course, the extent of that is highly uncertain.”
Powell added that markets diverging from the Fed on rate hike expectations “appears to reflect simply a different forecast, one in which inflation comes down much more quickly” than officials themselves believe.
Bitcoin thus appeared particularly sensitive to suggestions of rate hikes potentially ending sooner rather or later, with the conference ongoing at the time of writing.
Immediately beforehand, a snapshot of liquidity on the Binance BTC/USD order book uploaded to Twitter by monitoring resource Material Indicators showed a lack of significant support above $26,000.
Ask liquidity, meanwhile, was slowly building in an area closer to spot price at around $27,300.
“This year is crucial to how the next few shape up in the economy,” popular trader Crypto Tony meanwhile reacted, referencing Powell on Fed policy.
Markets increase rate freeze bets
As Bitcoin showed signs of volatility, U.S. dollar strength, traditionally inversely correlated, showed some strain.
A modest recovery then took the pair to a range familiar from several days prior, this still in focus prior to the week’s final Wall Street open.
Downside overnight came courtesy of increasing market expectations of an interest rate hike by the United States Federal Reserve in June.
These came thanks to low jobless claims data for the week, with Fed officials adding a hawkish tone.
“On the one hand, inflation is too high, and we have not yet made sufficient progress on reducing it,” a speech by board member Philip Jefferson at the 2023 International Insurance Forum in Washington, D.C., stated.
“On the other hand, GDP has slowed considerably this year, and even though the effect has been muted in the labor market so far, demand clearly has begun to feel the effects of interest rates that are 5 percentage points higher than they were a little over a year ago.”
According to CME Group’s FedWatch Tool, the odds of the Fed pausing its hiking cycle next month, at one point over 95%, stood at just 62% on the day.
In a detailed breakdown of the events, monitoring resource Material Indicators showed owners of bid and ask liquidity placing trades to manipulate BTC price behavior on short timeframes.
“After chopping sideways, markets began to price in potential for another rate hike as the morning’s Jobless Report and #FED speakers set the tone for that conversation ahead of #JPow’s appearance, scheduled for Friday,” part of Twitter commentary summarized.
“As price began to drop, a ladder of bids was rugged and price moved to prior support ~$26.5k, but a sell wall was quickly placed to suppress price.”
Material Indicators noted that BTC/USD performed a retest of the 100-day moving average (MA) — its third in the past seven days.
“After about 90 mins and a few nibbles at the sell wall, the roof was pulled. Shortly after that a new $36M block of bids was placed below local support and the melt up began,” it added.
In addition to the 100-day MA, the 200-week MA at $26,100, the analysis concluded, could also form a downside support zone next.
Material Indicators referenced the May 19 appearance by Fed Chair Jerome Powell, with the implication that further hawkish language on inflation would add to risk asset price pressure.
Traders in “wait and see” mode
Traders thus maintained potential bearish targets, these focusing on a broad area around $25,000.
“How much longer till expansion and is the bottom in? 25k’s tested, liq below us taken, bottom for this correction MIGHT be in but need to see how PA develops over the coming days. While we can’t rule out a flush lower yet, developing PA will give us some clues to work with,” part of a tweet on the day explained.
Credible Crypto uploaded two charts with trend lines worth noting, adding that the upper one should hold as support, with BTC/USD then going higher.
“I expect that blue dotted trendline on the right to hold which would mean less than 30 days for this sideways phase to complete and the next move up to begin,” he continued, describing the move’s character as “absolutely explosive.”
Bitcoin (BTC) is entering a new “speculation cycle” typical of a bull run, new analysis says.
In a tweet on May 16, Philip Swift, creator of data resource LookIntoBitcoin and co-founder of trading suite Decentrader, revealed history repeating itself according to the RHODL Ratio metric.
RHODL Ratiocreator on BTC price: “Zoom out”
RHODL Ratio is a method of tracking BTC price behavior based on the realized price of the supply — the price at which coins last moved.
Created by Swift in 2020, it compares the relative ages of coins which moved one week ago to those which moved 1-2 years ago.
This ratio gives an insight into the relative activity of short-term (STHs) and long-term holders (LTHs), and by extension the extent to which speculation is present on the market.
Currently, RHODL is bouncing higher, having hit its green accumulation zone at the end of 2022.
At the time, Swift told Cointelegraph that Bitcoin was “at the point of maximum opportunity” — something which has since proven true, with BTC/USD gaining 70% in Q1 2023.
Prior to that, its descent toward that point had coincided with Bitcoin’s own retreat to macro lows.
Now, with speculative activity seemingly increasing, he believes that a new bull cycle is already underway.
“When I created the bitcoin RHODL Ratio indicator in 2020, one thing that struck me was how it showed a new bull run forming…when the ratio value of younger coins began to increase. Which is where we are right now,” he commented.
“Don’t panic about small price pullbacks. Zoom out.”
Swift is not alone in his conviction. Responding, Checkmate, lead on-chain analyst at Glassnode, called RHODL Ratio “one of the greatest onchain finds.”
An accompanying chart meanwhile added that the 2021 bull market, despite delivering a blow-off top for BTC/USD, did not see a copycat move for RHODL. The last time the metric hit its red “high speculation” zone was at Bitcoin’s prior all-time high in late 2017.
Fear, depression and lack of interest
Continuing, Swift argued that on short timeframes, market participants remain risk-off on crypto markets.
The conclusion followed a scan of funding rates on exchanges, with a slew of “bearish” ratings for Bitcoin generated by Decentrader. These concerned open interest and long/short ratio in addition to funding rates themselves.
“Market is still fearful/depressed/uninterested…” he summarized on the day.
Earlier this month, Swift gave Cointelegraph an updated forecast on what might happen to Bitcoin in the final year before its next block subsidy halving. Among other eventualities, a return to $20,000 is not out of the question.
The pair had staged multiple crosses of the $27,000 mark the day prior, that area forming a low-timeframe focus now at risk of breaking down.
“3 wave up into resistance, followed by a retest and a rejection off resistance zone,” popular trader Crypto Tony summarized about recent activity.
He added that a potential target to wait for was now $26,400.
Trading account TraderSZ had previously predicted an “expansion candle” to enter should the breakdown continue.
“Small long flush early in the morning,” another popular trader, Daan Crypto Trades, continued.
“On the Bybit futures chart we can see how asks were filled and from there on out spot pushed price down to take out the longs that accumulated in this mini range. Overall still choppy and no clear direction.”
Analyzing order book setup on Binance, monitoring resource Material Indicators noted an overall lack of liquidity.
The largest-volume traders, it revealed, had reduced activity to a minimum as a result, perhaps due to that absence of coins exposing them to potential slippage.
Zooming out, however, an accompanying narrative for many remained the concept of “choppy” price action continuing.
The current trading range, featuring as a key support and resistance zone from 2021 onward, showed no signs of relinquishing control.
“For the next few days I expect price action to be choppy between $27.2k – $26.5k,” Titan of Crypto wrote in one such market appraisal.
$25,000 BTC price target in stocks comparison
While long-term bullish, trading group Stockmoney Lizards offered a potential downside target of $25,000 on the day.
Acknowledging the “head and shoulders” formation playing out over April — a bearish signal reported on previously — it also presented the 25-week simple moving average (SMA) as a possible support line.
The 25-week SMA stood at just $23,100 on the day, but was set to rise toward the potential retest in June.
A separate post nonetheless called the overall shape of price performance a “well-known” pattern, referencing similar moves on United States equities in years gone by. These moves ultimately resulted in a break to the upside.
Still lacking direction, traders hoped that the pair would either attempt to exit its current narrow range or touch more significant levels up or down.
For popular trader Crypto Ed, potential targets included the “gap” in CME futures created at the weekend.
“It’s really on the lower timeframe where the action is now; higher timeframe is not really exciting,” he summarized in his latest YouTube update on the day.
The CME gap to the downside lies between $26,500 and $26,800 — just below the overnight lows.
Crypto Ed continued that a bounce after the gap could take BTC/USD back to its range highs at $28,800, but that a downside “possibility” left $24,000 in play.
Other market participants were equally cautious, with trader Jackis describing Bitcoin as “very hard to read” under current circumstances.
“My personal take is we will have Weekly continuation and Daily breakdown,” he concluded in Twitter analysis on the day.
To that end, the chances of higher levels to come on weekly timeframes remained despite the current pullback.
“Important to note, that the weekly structure remains bullish & that whether from here or should any deeper pullback come is a potential HL in a bullish trend which should lead to a break of 31K until proven otherwise,” Jackis explained.
Analyst warns over debt ceiling volatility
Elsewhere, macro considerations increasingly began to include the unfolding debt ceiling crisis in the United States.